Insurance Fraud

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According to figures from the US Coalition Against Insurance Fraud, the cost of claims fraud in the US alone in 1995 amounted to US$ 85.3 billion, which equates to a cost of US$ 326.47 for each American citizen. Research by the Rand Institute for Civil Justice in the US revealed that over one third of people injured in vehicle accidents exaggerated their symptoms, which adds US$ 13-16 billion to the annual US insurance bill. Figures from the pan-European trade association, the Comité Européen des Assurances, estimate the minimum total for insurance fraud in the 25 European countries it represents of EUR 8 billion (GBP 5.6 billion), which equals two percent of annual insurance premiums. However, statistics from individual European countries suggest that this figure is very conservative. For example, according to the Association of British Insurers (ABI) insurance fraud cost the UK insurance industry GBP 650 million in 1999, 3.9 percent of claim payments, and as a result each insured pays an extra four percent in insurance premiums. In Italy, 4.58 percent of all claims and 3.25 percent of claims paid by the five major insurers were fraudulent, according to ISVAP, the insurance regulator. In contrast, estimates of insurance fraud in Japan are low, but the problem of fraud committed by insurance company employees is serious and is growing. The types of fraud committed vary from class of business to class of business. For example, exaggerated or totally fabricated claims are common in travel insurance, because it is often easy for the insured to commit fraud, since the alleged loss probably occurred thousands of miles away, making a detailed and thorough investigation difficult and uneconomic for the insurer. In motor claims, exaggerated symptoms and falsified injuries (such as through staged accidents) are common for third party claims, while among household claims dropping laptop computers and spilling paint on the floor "accidentally on purpose" is very common.

Public perceptions of insurance fraud:
According to research commissioned by Royal & SunAlliance in May 2000, over 50 percent of people would inflate the value of a claim by at least a third if it meant they could replace their GBP 9.99 High Street sunglasses with trendy designer shades, while 70 percent of people surveyed believed that fraud is a common practice. The top 10 items for which people are likely to inflate a claim are 1. New carpets

2. Expensive jewelry
3. TAG Heuer / Rolex watches
4. Computers
5. Three-piece suites
6. Wide-screen televisions
7. Games consoles
8. Laptops
9. Digital cameras / camcorders
10. Designer clothes
Royal & SunAlliance estimates that fraud costs it GBP 50 million per year. Gallup conducted a survey on public attitudes to insurance fraud on behalf of Saga Insurance in 1999. It found that one in four people in the UK felt that making a false insurance claim was understandable, acceptable or even praiseworthy. The acceptance of dishonesty by younger people highlighted in the ABI survey was confirmed in the Gallup survey, where almost one fifth of those aged 25-34 admitted to knowing someone who had filed a false insurance claim. According to research in the US, almost 10 percent of Americans would commit insurance fraud if they could get away with it, and 29 percent would not report insurance fraud committed by someone they knew. One quarter of Americans share the view that it is perfectly acceptable to exaggerate a claim to make up for the premiums they have already paid.

How does the law view insurance fraud?
There are very few countries that were found to have specific laws about insurance fraud. The few that do include Finland, Luxembourg, Czech Republic and Turkey. United Kingdom
Theft Act 1968. There is no definition of "insurance fraud" in UK criminal legislation, or indeed in most civil law jurisdictions. Any offence of insurance fraud therefore falls to be dealt with as deception and...
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